Correlation Between Solution Advanced and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Namyang Dairy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Solution Advanced and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Namyang Dairy, you can compare the effects of market volatilities on Solution Advanced and Namyang Dairy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Solution Advanced with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Namyang Dairy.
Diversification Opportunities for Solution Advanced and Namyang Dairy
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solution and Namyang is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy and Solution Advanced is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Solution Advanced Technology are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Solution Advanced i.e., Solution Advanced and Namyang Dairy go up and down completely randomly.
Pair Corralation between Solution Advanced and Namyang Dairy
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Namyang Dairy. But the stock apears to be less risky and, when comparing its historical volatility, Solution Advanced Technology is 48.95 times less risky than Namyang Dairy. The stock trades about -0.07 of its potential returns per unit of risk. The Namyang Dairy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,770,000 in Namyang Dairy on September 13, 2024 and sell it today you would earn a total of 550,000 from holding Namyang Dairy or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Solution Advanced Technology vs. Namyang Dairy
Performance |
| Timeline |
| Solution Advanced |
| Namyang Dairy |
Solution Advanced and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Namyang Dairy
The main advantage of trading using opposite Solution Advanced and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Namyang Dairy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Namyang Dairy vs. Korea New Network | Namyang Dairy vs. ICD Co | Namyang Dairy vs. DYPNF CoLtd | Namyang Dairy vs. Solution Advanced Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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